I'm close to going live with my new business, which will be a part-time venture with my wife and brother, we are all keeping our existing jobs and doing this alongside. At the moment we're weighing up as to whether we should be a partnership or go the whole hog and be a limited company.

As i understand it (please correct if i'm wrong!) if a business is a sole trader or partnership any profits are taxable as income to the individual owner(s). As a limited company corportation tax is applicable.

In the first year we are not intending to draw a salary or withdraw any money from the company. My concern with being a partnership is that my wife and I both earn around £32,000pa each. If any profits push us up in to the 40% tax bracket it then makes it more difficult for us to build up a reserve fund for my brother to leave his job to work the business full time.

The business is focused on providing a service so there would not need to be any major investment in stock, premises, etc that profits could be reinvested into to reduce tax.

Any suggestions or corrections?

Thanks